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TMI Blog2015 (12) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... nch offices on 22/08/2008. During the course of search, certain incriminating documents were seized and as per the seized documents, it was noticed that the assessee along with others have invested an amount of Rs. 230 lacs for purchase of lands situated at Singavaram Village, Denkada Mandal, Vijayanagaram District measuring 14 acres 81 cents and given to M/s Sai Lakshmi Township Pvt Ltd., for development and marketing. During the course of search proceedings, the assessee's were summoned by the Deputy Director of Income-tax (Inv), Visakhapatnam. In response to summons, the assessee appeared on 26-9-2008 and his statement was recorded. During the course of investigation proceedings, before the DDIT(Inv) to a specific question the assessee had agreed that he along with other associates have invested an amount of Rs. 230 lacs for purchase of 14.81 acres lands and furnished the source for investments to the extent of Rs. 206 lacs and the balance was admitted as unexplained investments. The DDIT(Inv) -Unit -III(2), completed the investigation and forward a report to the Assessing Officer. 2. The AO, based on the report of the DDIT(Inv) -Unit -III(2), was of the opinion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer is purely on surmises and conjectures. 3. The appellant crave leave to add to/alter/substitute/delete/modify all or any of the above grounds. 4. The ld. AR, at the time of hearing submitted that in this case, the assessment was framed consequent to a search operation u/s 132 of the Act, therefore assessment order passed u/s 143(3), r.w.s.147is bad in law and liable to be quashed. The AR further submitted that the AO has no jurisdiction to issue notice u/s148 to re-open the assessment in the case of a person, where search is conducted u/s 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May 2003, therefore, the only option available to the Assessing Officer is to issue notice u/s 153C and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to previous year in which search is conducted or requisition is made. The AR further submitted that in this case, the assessment is reopened based on the search proceedings in the case of third person, where certain documents belongs to assessee were seized which shows investments by the assessee in lands. He further a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken unsecured loans from parties who are agriculturists and the assessee has furnished copies of the documents and other proof as to identity and creditworthiness of the creditors. The assessee has also produced confirmation letters from the respective creditors, their bank statements, pattadar passbooks evidencing the ownership of agricultural lands and the pass books issued by the tobacco board, a statutory board created by the Govt. of India as evidence of receipt of agricultural income. The Assessing Officer failed to give an iota of explanation how these documents cannot meet the credible evidence, without even a fair inquiry from his side. Thus, the Assessing Officer cannot allege that the assessee has not produced credible evidence. The AR further submitted that the onus cast upon the assessee to explain the credits by providing identity, creditworthiness and capacity of the creditor and genuineness of the transaction. Once, the initial burden is proved then, the burden shifts to the Assessing Officer to prove otherwise. Therefore, for the reasons stated above he urged to set aside the CIT(A) order and delete the additions made by the Assessing Officer. The AR relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee contention is that the assessment cannot be reopened u/s 147 but, the Assessing Officer can issue notice u/s 153C r.w.s. 153A and proceed to assess or reassess the total income of each of assessment year falling within six assessment years as referred to in section 153A. 8. Now, the question before us is (i) whether the Assessing Officer is right in reopening the assessment u/s 147, where the Assessing Officer is satisfied that any money, bullion, jewellery or valuable article or thing or books of account or documents seized or requisitioned belongs to a person other than the person referred to in section 153A. The Income tax Act, 1961, by section 153A, 153B and 153C provides for new scheme of assessment of cases, where the search is taken place on or after 31st Day of May 2003. Until, insertion of section 153A to 153C, the search assessments was governed by separate provisions of Block assessment under section 158BC and as per the said provisions, the concept of block assessment was in force. The amendment brought in to the statue w.e.f. 1-6-2003, replaces the existing provisions with the new section, i.e. 153A to 153C governed the new scheme of search asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under subsection (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A." 10. Section 153C deals with cases of persons other than the persons referred to in section 153A. As per the provisions of section 153C, where the Assessing Officer satisfied that any money, bullion, jewellery or valuable article or thing or books of account or other documents seized or requisitioned belongs to a person other than the person referred to in section 153A, then the books of accounts or documents shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of this Act shall apply to the assessment or reassessment made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 65.6 The new section 153B provides for the time-limit for completion of search assessments. It provides that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years under section 153A within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. 65.7 This section also provides that assessment in respect of the assessment year relevant to the previous year in which the search is conducted under section 132 or requisition is made under section 132A shall be completed within a period of two years from the end of the financial year in which the last of the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6CC to give reference to section 153A in these sections. 65.12 These amendments will take effect from 1st June, 2003. 11. A careful study of section 153A to 153C and also the circular issued by the CBDT explaining the procedure of assessment in search cases, it shows that these are separate provisions independent of other provisions relating to reassessment, because of the non abstante clause begins with the said sections. The language used in these sections, i.e. 'notwithstanding anything contained' in section 139, section 147, section 148, section 149, section 151 and section 153 made it clear that provisions of these sections are not made applicable to the assessments covered by the provisions of section 153A. Prior to the introduction of these three sections, there was a separate chapter XIV -B of the Act, by section 158BC to 158BE which governs the search assessments which is popularly known as Block assessment. The earlier provisions provides for single assessment to be made in respect of undisclosed income of Block period consisting of 10 assessment years immediately preceding the assessment year in which search took place and the broken period of up to the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation where there is search u/s 132. 13. Under the provisions of section 153A, the Assessing Officer is bound to issue notice to the assessee to furnish the returns of income for each assessment years falling within the six assessment years immediately preceding the assessment year in which search or requisition is made. Another significant feature of this section is that the Assessing Officer is empowered to assess or reassess the total income of the aforesaid period which includes disclosed and undisclosed income. Therefore, the new provisions has given wide powers to the Assessing Officer to assess or reassess the total income of six assessment years falling within the period of those six assessment years immediately preceding the assessment year in which search is conducted. Under the new provisions of section 153A, the statute is provides wide powers to the Assessing Officer in respect of assessments already completed u/s 143(1) or 143(3). If such orders is already in existence prior to the initiation of search, the Assessing Officer is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, found dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32 or books of accounts, or any other asset or other documents requisitioned u/s 132A. If Assessing Officer justified in proceeding with section 147 to reopen the assessment, then there would be no relevance to section 153A, which was inserted in to the Act to deal exclusively with search cases. The legislators in their wisdom clearly spelt out the provisions of law applicable to search cases by using the word shall to begin with section 153A, made it mandatory that the Assessing Officer bound to issue notice u/s 153A or 153C, thereafter proceed to assess or reassess the total income, where search is conducted u/s 132 or requisition is made u/s 132A. Therefore, in our opinion, the AO is not justified in reopening the assessment u/s 147 and his order is illegal and arbitrary. 15. A similar issue came up for consideration before the Special Bench of this tribunal and the special bench had an occasion to deal with the interpretation of section 153A of the Act in the case of All cargo Global Logistics Ltd &Ors. Vs DCIT (2012) 137 ITD 287 (Mum). The Special Bench after considering the provisions of section 153A and CBDT circular has held as under. "52. The provision comes into operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the findings of the search and any other material existing or brought on the record of the A.O. b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search." .. .... ... 58. Thus, question No.1 before us is answered a) as under (a) In assessments that are abated, the A.O. retains the original jurisdiction as wel l as jurisdiction conferred on him under s. 153A for which assessments shall be made for each of the six assessment years separately ; 16. In yet another case, the ITAT Mumbai Bench, in the case of State Bank of India vs. Deputy Commissioner of Income Tax (2013) 22 ITR 609, had considered the issue. The Mumbai bench after considering the relevant sections and CBDT circular has held as under: 18. A perusal of Section 153A shows that it starts with a non obstante clause relating to normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. These Sections, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer is empowered to assess or reassess the "total income' of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the ,,total income of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. 20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisi tion. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee s total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od under consideration falls within the exclusive domain of section 153A. In the instant case, since the assessment is made consequent to search in another case, the Assessing Officer is bound to issue notice u/s 153C and thereafter proceed to assess or reassess total income under section 153A of the Act. The Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction. Hence, the assessment order dated 31-12-2010 passed u/s 143(3) r.w.s. 147 is quashed. 18. Since, we have allowed the assessee ground on legality of reopening of assessment u/s 147 and quashed the assessment order, therefore, we do not consider it appropriate to discuss the other grounds raised by the assessee on merits of the case. Accordingly the grounds raised by the assessee are rejected. 19. Since, the facts of the above legal ground taken by the assessee's is same in ITA.No.400/Viz/2014, 401/Viz/2014, 402/Viz/2014, 403/Viz/2014, 404/Viz/2014, 405/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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